Mining moratorium may delay Philex's $1-B Silangan project

MANILA, Philippines - Pangilinan-led Philex Mining Corp. said yesterday a proposed government moratorium could adversely affect the issuance of the environmental compliance certificate (ECC) for Philex’s $1-billion Silangan mining project.

In a press conference yesterday afternoon at the Philex office in Pasig, Philex chairman and chief executive Manuel V. Pangilinan said the proposed moratorium that could affect permits of the Silangan project could put them “off track.” He said their target is to begin operation by 2015. The life of the mine is 30 years.

Philex said an independent resource estimate by mining consultant SRK Perth revealed that the deposits, located in Surigao province, contained an estimated five million pounds of copper and nine million ounces of gold. Pangilinan estimated that this is worth $35 billion.

The Silangan project is managed and operated by Silangan Mindanao Mining Co. Inc. (SMMCI), which is 100 percent owned by Philex.

Last year, the Board of Investments (BOI) granted SMMCI’s request for incentives. However, Pangilinan during the briefing said the incentives they are receiving relate to customs duties. BOI grants duty free importation of capital equipment. When asked about income tax holiday (ITH), Pangilinan said they have not thought about applying.

In the same conference, Pangilinan stresses the need for more dialogue on the new Mining Policy that is being crafted by the government.

According to him, Philex is open to a more equitable sharing in terms of revenues with the government given that the natural resources belong to the country. He proposed though the Malampaya formula be used in revenue sharing between the government and the mining sector.

He said the government should get their share only after the developer subtracts their costs including operational expenses. Pangilinan stressed that mineral prices fluctuate that is why it should be taken into consideration in the formula for taxes.

For 2011, Philex paid P3.2 billion in taxes to the government. Philex said the taxes it paid is more than 40 percent of their earnings before interests, taxes, depreciation and amortization. “We are not opposed to a more equitable revenue sharing with the government,” Pangilinan said.

Also on the issue of the Mining Policy, Pangilinan said the law governing small scale mining should be different from large scale. Likewise he said there should be no total ban for small scale mining because it is the livelihood of people.

Pangilinan explains they are not opposed to any regulation. In fact, he said the industry should work towards self-regulation.